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4/25/2025

Top Baloise Investor Cevian Sells Stake to Helvetia Shareholder Ahead of Merger Deal

Wall Street Journal (04/25/25) Vardon, Elena

Baloise’s (BLHEY) largest investor has sold its stake to Helvetia’s (HELN) top shareholder, days after the Swiss insurers announced a merger to create a group with a combined market value of around 18 billion Swiss francs ($22 billion). Cevian Capital sold its 9.4% stake in Baloise to Patria Genossenschaft — which owns 34.1% of Helvetia — in an unconditional deal at an undisclosed price, Baloise said Friday. Swedish activist investor Cevian had become the insurer’s top shareholder in September by raising its stake from 3.1% and reportedly asked for changes at the group. Baloise’s shares fell 5% in mid-morning trading while Helvetia’s were flat. Earlier this week, Baloise and Helvetia agreed to a merger of equals. The combined group, which will be listed on the SIX Swiss Exchange as Helvetia Baloise Holding, is set to become the second-biggest player in Switzerland after Zurich Insurance Group (ZURVY), holding a market share of around 20%. “This event is therefore supportive and, in our view, reduces the chance of a counterbid for Baloise,” Keefe, Bruyette & Woods analyst Michele Ballatore said in a note to clients. The insurers expect the deal to close in the fourth quarter, pending customary regulatory and antitrust approvals, and scheduled extraordinary meetings on May 23 for shareholders to vote on the proposed tie-up. Patria, which has already committed to supporting the merger, will use its newly acquired stake to vote at Baloise's meeting. Baloise also noted following the stake sale that the combined company's board will consist of 13 members instead of the previously planned 14, as it won't be nominating a seventh board member.

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4/25/2025

As Elliott Moves In, BP Investment Case Splits ESG Fund Market

Bloomberg (04/25/25) White, Natasha

As Elliott Investment Management pressures BP Plc (BP) to abandon its renewable-energy ambitions, ESG fund managers can’t agree on how to treat the UK oil giant. BP’s pledge to beef up investments in oil and gas — and slash its commitments to renewable energy — has coincided with ESG fund inflows into the company of $200 million since late February. ESG fund outflows from BP, meanwhile, were $315 million, resulting in net withdrawals of $115 million, according to data compiled by Bloomberg. Money managers who say BP still belongs in an ESG portfolio include Legal & General Investment Management, which added BP to its Climate Action Global Equity fund in September and has held on to the stake despite the company’s pivot away from its climate commitments. “We’ve seen some backpedaling,” said Nick Stansbury, manager of the fund and head of climate solutions at Legal & General. “But that is in the context of an awful lot of backpedaling everywhere else.” Stansbury said that “what matters isn’t only the absolute sustainability performance of a company, but its performance relative to other companies.” Elliott has now built up a stake in BP to just over 5%, making it one of the oil major’s biggest investors along with BlackRock Inc. (BLK) and Vanguard Group Inc. Elliott has made clear it wants BP to return to its core oil and gas business as part of a strategy to generate $20 billion of annual free cash flow by 2027. Against that backdrop, BP has embarked on a major pivot within its energy strategy. The company said on Feb. 26 it was abandoning earlier transition plans, and will instead seek to increase investment in oil and gas to about $10 billion a year. It also plans to reduce annual investment in low-carbon energy to $1.5 billion to $2 billion, which is roughly $5 billion less than BP’s previous guidance. Since BP’s announcement, more than 60 funds that commit to a sustainability objective in their prospectus have added to their existing stakes in the company, according to data compiled by Bloomberg. A further six such environmental, social and governance funds invested in BP’s stock for the first time. The ESG investment industry’s biggest purchase of BP shares since late February was made by Franklin Templeton’s Investment fund (TEMGGRI LX), which added 3.2 million shares, Bloomberg data show. BP’s decision to mount a full-throated retreat from the green transition while boosting investments in oil and gas has enraged climate activists and drawn criticism from a number of pension funds with sustainable investing policies, including Nest in the UK and Sampension in Scandinavia. The ESG fund industry has long struggled to reach a consensus on how to handle fossil-fuel companies. Many fund managers tout years-long engagement strategies they say will ultimately drive oil and gas producers to decarbonize. But the retreat from climate goals by BP and other oil majors indicates those efforts are having little impact. Close to 5,000 funds marketing themselves as ESG hold stakes in companies in the fossil-fuel industry, according to a recent analysis by nonprofits Urgewald and Facing Finance. Over a third of the roughly 14,000 funds assessed had more than $134 billion invested in companies “actively pushing” projects that expand the production of oil, gas and coal. BP was among the most popular stocks among the ESG funds analyzed. “Companies that pursue fossil-fuel expansion projects in the midst of a climate crisis are jeopardizing our future,” said Julia Dubslaff, finance researcher at Urgewald. “Their presence in ESG funds violates the very concept of sustainability.” New European regulations are about to make it more difficult for fund managers to say they’re ESG-compliant when they’re invested in fossil fuels. The European Securities and Markets Authority is requiring asset managers to ensure that at least 80% of their funds reflect the sustainable fund names that they use. ESMA also says that a fund’s name may require it to exclude certain exposures, such as oil. About $460 billion of assets currently don’t meet ESMA’s ESG fund-naming guidelines, according to a report published by Bloomberg Intelligence analysts Adeline Diab and Hitomi Kimura. They also note that roughly 500 funds representing $380 billion dropped their ESG labels last quarter, as the industry adjusts to the new naming requirements. Stansbury at L&G said the climate fund he manages is designed to hold companies that represent a “plausible financial opportunity to make money and profit from being decarbonization leaders rather than laggards.” That means L&G will target high-emissions companies it thinks have a good chance of transitioning to a cleaner business model. Natalie Stafford, head of ESG and sustainability at S-RM, a consulting firm, said BP’s climate pullback “represents a period of proper reflection,” which isn’t “necessarily a bad thing.” The company’s earlier climate pledges smacked of “green grandstanding,” she said. The oil and gas industry “hasn’t done a great job of investing in pure-play renewables,” Stansbury said. “But there’s lots and lots of other places in a low carbon energy system for them to play in.”

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4/25/2025

Ortelius Calls for ‘a New Board and a New Direction’ at Brookdale Senior Living

McKnight's Senior Living (04/25/25) Bonvissuto, Kimberly

In an open letter to Brookdale Senior Living (BKD) stockholders on Thursday, Ortelius Advisors called for “a new board and a new direction” at the country’s largest senior living company after what it said were “years of missteps and shortcomings” that have led stockholders to lose confidence in the current board. The New York-based activist hedge fund group called the April 13 departure of former CEO Lucinda “Cindy” Baier “just the first step” in holding the board accountable for the “massive destruction” of stockholder value. During Baier’s tenure, Ortelius said, Brookdale’s stock price dropped 39%, and occupancy fell to 79.4% compared with 87.2% for the senior living industry as a whole. The letter also cited dips in annual net operating income margins; average annual adjusted earnings before interest, taxes, depreciation and amortization margins; cumulative cash flow; and Brookdale’s tangible book value per share. Just last month, Peter DeSorcy, Ortelius Advisors' co-founder and management member, wrote a letter to fellow Brookdale stockholders about his concern regarding, in his opinion, the senior living operator's “abysmal performance and chronic undervaluation.” That letter kicked off a proxy fight, with Ortelius nominating six candidates for election to the company's board, to “effect meaningful change” and hold the board and management team accountable for “dismal results.” In response, according to Ortelius, the board “hastily” announced a transition plan for Baier, the formation of a CEO search committee and a review of potential governance enhancements. “Following years of defending Brookdale's CEO, despite the company's abysmal performance, and acting only after our launch of a director election contest, we believe that the board's actions are 'too little, too late,'” the letter read. Ortelius laid out what it called “viable paths” to review the company's performance and maximize long-term stockholder value, including monetizing the underperforming owned properties, improving financials, reducing mortgage debt, eliminating the leased portfolio, reviewing strategic alternatives, installing a new management team, and refreshing the board. Brookdale already has appointed two new board members this month. When announcing Baier's departure, the company also announced that it had named Mark Fioravanti, president and CEO of Ryman Hospitality Properties, as an independent director on the board. Yesterday, the company announced that Joshua Hausman, managing partner at MHJ Capital Partners and former managing director at Onex Partners, had been named an independent director on the board. Brookdale also previously announced that current board member Frank M. Bumstead will not stand for reelection at the company's upcoming annual meeting. With the appointment of Fioravanti and Hausman and the impending departure of Bumstead, Brookdale said, the company's board members will have an average tenure of less than four years after the company's annual meeting. Of the eight directors, seven will be independent, including two appointed last year. “The continuing refreshment of our board with highly qualified directors reflects our commitment to bringing in new expertise and perspectives and follows engagement with our shareholders,” interim CEO and Board Chairman Denise W. Warren said Thursday in the announcement of Hausman's appointment. Brookdale's portfolio includes 353 owned properties and 266 leased facilities, according to Ortelius. (Brookdale puts the total at 647 as of March 31, the end of the last period for which it has publicly reported earnings.) Ortelius stated that 406 of the 619 communities it referenced (66% of the stated owned and leased portfolios) reported occupancy of higher than 75%, whereas 213 (34%) reported occupancy below 75%. “We believe that stockholders support our drive for a new Board, and a new direction,” Ortelius said, citing as evidence an 8% increase in stock prices following the firm's board nominations and a 9% jump following Baier's departure. In addition to stepping down as president and CEO earlier this month, she also resigned from her position on the company's board of directors. “After years of missteps and shortcomings, stockholders have lost confidence in the incumbent board's decision-making abilities, and the board cannot be trusted to take decisive action, necessary after the vast destruction of stockholder value, and put stockholders first,” the letter concluded.  Ortelius indicated that it intended to file a preliminary proxy statement with the SEC.

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4/25/2025

Toyota Chair Proposes $42 Billion Buyout Deal for Carmaker’s Biggest Subsidiary

Financial Times (04/25/25) Inagaki, Kana; Keohane, David; Lewis, Leo

Toyota’s (TM) chair has proposed a ¥6 trillion ($42 billion) deal to take the company’s biggest subsidiary private as he seeks to cement control over the world’s largest carmaker and streamline its notoriously complex governance structure. In recent years, Japan’s most powerful company has faced increasing investor pressure to simplify its web of interconnected equity holdings that the group holds across tens of suppliers and affiliate automakers. Akio Toyoda, the grandson of Toyota’s founder, is considering investing his personal money to lead a buyout of Toyota Industries, which makes industrial equipment and vehicles, with financing from the country’s three biggest banks, according to four people with knowledge of the talks. The proposal values Toyota Industries at about ¥6 trillion, including debt. The listed subsidiary has a market capitalization of ¥4.3 trillion at present. The same people warned that the talks could still collapse. Toyota, which with its affiliates has a 40% stake in Toyota Industries, is considering whether to participate in the take-private deal, the people said. It is unclear how advanced those discussions are or if the carmaker will follow through, they added. Private equity groups have also explored participating in a buyout or buying sections of the business carved out as part of the deal, according to one person with knowledge of the talks. In recent years, Japan’s government and regulators have pushed companies to rapidly improve corporate governance. The Tokyo Stock Exchange is also trying to reform so-called parent-child listings, where a large company controls a listed subsidiary. Shareholder approval for Toyoda fell to a record low of 72% last year, prompting the carmaker to increase the number of non-executive directors on its board ahead of this year’s annual meeting. Within the carmaker’s sprawling empire, Toyota Industries is considered one of the most important suppliers for the group since it owns a 9.1% stake in the carmaker and was intimately tied to the founding of the company. Japan’s auto suppliers, and Toyota’s in particular, have also become a target for activist investors who are betting both that corporate governance reform will force carmakers to buy in their subsidiaries and that competition will demand changes to their supply chains. A number of Toyota’s smaller suppliers have already been engaged by funds linked to Yoshiaki Murakami, the country’s most famous activist. Toyota has previously made other automobile body suppliers into fully owned subsidiaries such as Toyota Auto Body and Kanto Auto Works in 2012.

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4/25/2025

KT&G Eyes Overseas M&A after Rejecting Activist Fund's Offer

Korea Economic Daily (04/25/25) Cha, Jun-Ho

KT&G Corp. (033780), South Korea’s dominant tobacco and ginseng producer, is seeking to acquire a Japanese ginseng company after dismissing a 1.9-trillion-won ($1.3 billion) buyout offer from an activist fund for its wholly owned unit Korea Ginseng Corp. KT&G has recently sent requests for proposal to major accounting firms and investment banks to search for potential acquisition targets among ginseng and red ginseng suppliers in Japan, according to investment banking sources on Friday. It did not specify a target company. Given the relatively small size of Japanese ginseng producers, investment bankers estimate any deal KT&G could strike would be valued at between 100 billion and 200 billion won ($70 million-140 million). The move follows the Korean tobacco manufacturer’s rejection of a 1.9-trillion won offer from Singapore-based Flashlight Capital Partners for Korea Ginseng last year. Since 2022, Flashlight has been advocating for a horizontal spin-off and stock market listing of the cash cow, arguing KT&G’s control has weighed down the latter's valuation. In an immediate rejection of the buyout proposal, KT&G stated in a letter that Korea Ginseng was not undervalued and separating it would weaken the company's business synergy. It also said it would grow its ginseng business into a global brand. Last year, KT&G spent 9 billion won to acquire Centralpharm Co., a Korean manufacturer of health functional foods such as probiotics and vitamins. Korea Ginseng, better known for its signature Jung Kwan Jang brand, is the country’s largest supplier of red ginseng products, popular health supplements. In 2024, it earned 66.7 billion won in operating profit on sales of 1.1 trillion won. Its parent company KT&G has frequently been engaged by activist funds calling for governance reform and shareholder-friendly measures. In 2006, Carl Icahn made an unsolicited takeover bid for KT&G, jointly with fellow activist Warren Lichtenstein, founder and CEO of the U.S.-based Steel Partners. Although the bid fell through, it prompted KT&G to pledge up to $2.9 billion in shareholder returns by 2008, resulting in substantial gains for investors.

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4/25/2025

Elliott Pushes for Change in BP Strategy Chief and Structure

Reuters (04/25/25) Nasralla, Shadia

Elliott Investment Management wants oil major BP Plc (BP) to replace its strategy chief and create separate units for upstream and downstream activities to improve accountability, a source familiar with the situation said on Friday. Elliott holds a stake of a little more than 5% in BP, the strategy, sustainability and ventures arm of which is led by Giulia Chierchia, a key architect of the company's ill-fated focus on renewables under previous CEO Bernard Looney. Chierchia joined BP from consultancy McKinsey & Company in 2020 as Looney's strategy chief. Gordon Birrell is responsible for BP's production and operations arm, which includes hydrocarbon upstream activities such as oil exploration and production as well as refineries, which are typically considered a downstream business. Emma Delaney, meanwhile, is in charge of BP's customers and products division, which includes petrol and convenience store retail sales — businesses often labeled as downstream activities in other groups. Before Looney became CEO in 2020, BP had separate upstream and downstream units, but under his plan to cut BP's oil and gas production and invest heavily in lower-carbon businesses including renewables, the structure changed. BP's refining earnings suffered last year, partially due to a prolonged outage at its Whiting refinery in the United States and it reported a death at its bioenergy business in Brazil as well as four life-changing injuries. Current BP CEO Murray Auchincloss, who served as finance chief under Looney, in February announced the complete abandonment of Looney's strategy as well as cost and spending cuts, vowing to slash BP's debt. Meanwhile, BP's chair Helge Lund, who supported both Looney's plans and BP's renewed focus on oil and gas, has announced his departure on a flexible timeframe that could stretch into 2026. But almost a quarter of shareholders at BP's annual general meeting this month voted against his re-election, pushing BP to say it would give an update on the situation within six months. BP's shares have underperformed peers including Shell (SHEL) and Exxon (XOM) in the last five years. Elliott has also urged BP to boost its adjusted free cash flow to $20 billion by 2027 from an oil-price adjusted $8 billion last year through significant spending cuts and cost reductions, another source familiar with the situation said on Tuesday.

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4/25/2025

U.S. Refiner Phillips 66 Posts Bigger-than-Expected Quarterly Loss on Lower Margins

Reuters (04/25/25)

Phillips 66 (PSX) reported a bigger-than-expected loss for the first quarter on Friday, hurt by lower refining margins amid widespread maintenance and turnaround activities across the U.S. refining sector. U.S. refineries typically undergo seasonal maintenance and turnaround activities in preparation for the summer driving season, when fuel demand significantly increases. "Our results reflect not only a challenging macro environment, but also the impact from one of our largest-ever spring turnaround programs," said CEO Mark Lashier. "With the bulk of our turnarounds behind us, we are well positioned to capture stronger margins as the year unfolds." The company's refining unit posted a net loss of $937 million for the first quarter, compared with a year-ago profit of $216 million. Phillips 66 said its realized refining margins fell 38% to $6.81 per barrel during the January-March quarter, with turnaround costs rising more than two-fold to $270 million. Its crude capacity utilization stood at 80% compared with 92% last year. Phillips 66's results echo those of rival Valero Energy(VLO), which on Thursday reported a quarterly loss due to lower refining margins. The results come amid a heated boardroom battle between Phillips and Elliott Investment Management, which is pushing for changes in the refiner's organization structure, operations, and board. The U.S. energy sector is also preparing for a potential fallout from President Donald Trump's sweeping tariffs and the rapidly intensifying trade war with China — factors that could weigh on demand for refined products like gasoline, diesel, and jet fuel. Phillips 66 posted an adjusted loss of 90 cents per share for the three months ended March 31, compared with analysts' average loss estimate of 72 cents per share, according to data compiled by LSEG.

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4/25/2025

Nano Dimension Completes $116 Million Markforged Acquisition

3D Printing Industry (04/25/25)

Nano Dimension (NNDM) completed its acquisition of U.S. FDM 3D printer manufacturer Markforged Holding Corporation (MKFG). This announcement comes weeks after the additive manufacturing electronics firm finalized a similar deal for the industrial 3D printer OEM Desktop Metal (DM). Nano Dimension’s deal for Markforged was first announced in September 2024. Valued at $116 million, or $5.00 per share, the transaction has been sealed following the completion of regulatory approvals and satisfaction of customary closing conditions. As part of the agreement, Markforged’s Chief Financial Officer, Assaf Zipori, has become Nano Dimension’s new CFO. According to a Nano Dimension press release, the acquisition gives the company a “strong foothold” in metal and composite manufacturing and marks a “leap forward” in AI-optimized production. Ofir Baharav, Nano Dimension’s CEO, called the acquisition “a major milestone” in fulfilling the company’s vision of “building a preeminent digital manufacturing leader.” He stated that Markforged’s installed base of 15,000 systems provides a “strong platform” for expanding Nano’s global reach. “While Markforged solutions have achieved nearly 50% gross margin, we will continue to take clear, decisive steps to drive profitability and strengthen our capital position in the quarters ahead,” Baharav added. Markforged's acquisition comes after a protracted period of M&A uncertainty at Nano Dimension, marked by legal disputes and leadership upheaval. The transaction was initially valued at a 71.8% premium to Markforged's volume-weighted average price as of Sept. 24, 2024. It formed part of an acquisition-driven strategy led by then-CEO Yoav Stern, who also initiated the $179.3M agreement to acquire Desktop Metal at $5.295 per share. Nano recently experienced a significant leadership shake-up. Yoav Stern was ousted as CEO and removed from Nano Dimension's board of directors in December 2024. The company's remaining directors were replaced by a new slate backed by activist shareholder Murchinson Ltd. A vocal critic of Stern and his pro-M&A stance, Murchinson previously called the agreements for DM and Markforged “overpriced” and “misguided.” The Delaware Court of Chancery later ordered Nano Dimension to fulfill its acquisition of Desktop Metal, which was finalized earlier this month. 2024 saw Markforged generate annual revenues exceeding $85M, while non-GAAP gross margins reached approximately 50%. Previous calculations based on fiscal year 2023 figures indicated that DM and Markforged would provide a combined projected revenue of $340 million. Nano Dimension believes that integrating the Waltham, Massachusetts-based company will strengthen its position in production-line manufacturing. It describes Markforged as an industry leader in advanced manufacturing systems, materials science, cloud-based services, and AI-driven production. For Nano, the AI advantage is pivotal. The company believes Markforged's expertise in artificial intelligence will enable it to meet growing requirements for precision and consistency. Additionally, the business combination also looks set to extend Nano Dimension's customer base and application reach. Markforged's 3D printers are deployed globally across aerospace, defense, automotive, consumer electronics, industrial automation, and medical technology sectors. Ultimately, Nano is confident it can build on Markforged's progress in rapid manufacturing, re-shoring, supply chain resilience, intellectual property security, and sustainability. By integrating Markforged, Nano Dimension is focused on expanding its position in metal and composite 3D printing on the factory floor. It also assured investors that this new initiative will support ongoing efforts to deliver shareholder value, build a robust capital base, and improve financial performance.

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4/24/2025

Lions Gate Shareholders Approve Split of Studio and Starz business

Reuters (04/24/25)

Shareholders of Lions Gate Entertainment (LGFa), the studio behind the "John Wick" movie franchise, have approved a plan to split its film and TV studio from the Starz business, a person familiar with the matter told Reuters on Wednesday. The split is intended to streamline operations and better position the company to compete in an industry where customers are shifting from cable TV to streaming services such as Amazon Prime Video (AMZN), YouTube, and Netflix (NFLX). The standalone Lionsgate Studios (LION) includes the company's Motion Picture Group, Television Studio operations, and a library of more than 20,000 film and television titles. In December, Bloomberg News reported that Anson Funds Management had taken a stake in Lionsgate Studios and was urging the company to explore strategic options, including a potential sale. Last year, Comcast (CMCSA) said it planned to spin off the bulk of its fading NBCUniversal cable TV networks, including MSNBC and CNBC, as the company is repositioning itself for growth in the streaming era.

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